Dewy, Cheatum, & Howe (DC&H) is a CPA firm that had the following business trans
ID: 2493315 • Letter: D
Question
Dewy, Cheatum, & Howe (DC&H) is a CPA firm that had the following business transactions for the year of 2015. Using the provided spreadsheet and Financial Statements, please post the business transactions and then create the four (4) required financial statements for year ending 2015 1.) DC&H borrowed $30,000 from the bank to buy a new building 2.) DC&H billed $140,000 in sales revenue, $40,000 in cash and the balance on account 3.) DC&H bought office supplies for $3,000 on account. (due to immaterial amount the supplies were expensed) 4.) DC&H sold the old building for $25,000 - which equaled the salvage value of the building. The original cost of the building was $40,000 5.) DC&H bought $5,000 in marketable securities 6.) DC&H paid $75,000 for salaries 7.) DC&H paid $20,000 towards the Note Payable, of which $18,000 was applied to the principal and the rest interest. 8.) DC&H collected $105,000 on accounts receivable 9.) DC&H paid $12,000 for advertising 10.) DC&H paid $13,000 in utilities 11.) It was determined that an allowance for doubtful accounts needed to be established and DC&H calculated the first year amount to be $5,000 12.) DC&H sold land for $40,000, receiving $20,000 in cash and a $20,000 promissory note 13.) DC&H received and paid in full a tax bill for $5,000, of which $3,000 was from a prior year. 14.) DC&H recognized and expensed the first year depreciation on the new building using the straight line method. The Building salvage value is $5,000 and depreciates over 5 years. The building was purchased on May 1st 15.) DC&H paid $10,000 in dividends Dewy, Cheatum, & Howe CPA's Beginning Balance 1/1/15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Totals Assets Cash $ 35,500 Marketable securities $ 5,000 Accounts receivable $ 12,500 Allow. Doubtful accounts $ - Note Receivable Building & Equip $ 125,000 Accumulated Depreciation $ (40,000) Land $ 40,000 Total Assets $ 178,000 Liabilities Accounts Payable $ 6,500 Wages payable $ - Taxes payable $ 3,000 Notes payable $ 40,000 Total liabilities $ 49,500 Shareholders equity Common stock $ 50,000 Retained earnings $ 78,500 Sales Revenue Salary Expense Advertising Expense Depreciation Expense Interest Expense Bad Debt expense Utilities Expense Office Supplies Expense Tax Expense Dividends Total Shareholders Equity $ 128,500 Dewy, Cheatum, & Howe CPA's Balance Sheet at 31-Dec-14 31-Dec-15 Dewy, Cheatum, & Howe CPA's Current assets Income Statement for Year Ending Cash $ 35,500 31-Dec-15 Marketable securities $ 5,000 Sales revenue Accounts receivable $ 12,500 Expenses: Allow. for Doubtful accounts Salary Total current assets 53,000 Advertising Building and equipment , cost 125,000 Utilities Accumulated depreciation -40,000 Bad Debt Expense Land 40,000 Office Supplies Note Receivable $ - Tax Expense Total assets $178,000 Interest Expense Depreciation Total expenses Current liabilities Net income Accounts payable $6,500 Wages payable 0 Taxes payable 3,000 Total current liabilities 9,500 Notes payable $40,000 Shareholders’ equity Common stock 50,000 Retained earnings 78,500 Treasury stock Dewy, Cheatum, & Howe CPA's Total liabilities and shareholders’ equity $178,000 Statement of Retained Earnings 31-Dec-15 Dewy, Cheatum, & Howe CPA's Retained Earnings Beg Bal Statement of Cash Flow for Year Ended 31-Dec-15 Net Income/(loss) Cash flow from operating activities Dividends NET INCOME / (LOSS) Retained Earnings End Bal Depreciation Accounts Receivable Accounts payable Taxes payable Net cash provided by operations Cash flow from investing activities (Purchases) sale of building and equipment (Purchase) sale of marketable securities (Purchase) sale of land Net cash provided by investing activities Cash flow from financing activities Issuance (repayment) of long-term debt Payment of dividend Issuance (repurchase) of common stock Net cash provided by financing activities Net cash flow Beginning Cash Balance Ending Cash Balance Dewy, Cheatum, & Howe (DC&H) is a CPA firm that had the following business transactions for the year of 2015. Using the provided spreadsheet and Financial Statements, please post the business transactions and then create the four (4) required financial statements for year ending 2015 1.) DC&H borrowed $30,000 from the bank to buy a new building 2.) DC&H billed $140,000 in sales revenue, $40,000 in cash and the balance on account 3.) DC&H bought office supplies for $3,000 on account. (due to immaterial amount the supplies were expensed) 4.) DC&H sold the old building for $25,000 - which equaled the salvage value of the building. The original cost of the building was $40,000 5.) DC&H bought $5,000 in marketable securities 6.) DC&H paid $75,000 for salaries 7.) DC&H paid $20,000 towards the Note Payable, of which $18,000 was applied to the principal and the rest interest. 8.) DC&H collected $105,000 on accounts receivable 9.) DC&H paid $12,000 for advertising 10.) DC&H paid $13,000 in utilities 11.) It was determined that an allowance for doubtful accounts needed to be established and DC&H calculated the first year amount to be $5,000 12.) DC&H sold land for $40,000, receiving $20,000 in cash and a $20,000 promissory note 13.) DC&H received and paid in full a tax bill for $5,000, of which $3,000 was from a prior year. 14.) DC&H recognized and expensed the first year depreciation on the new building using the straight line method. The Building salvage value is $5,000 and depreciates over 5 years. The building was purchased on May 1st 15.) DC&H paid $10,000 in dividends Dewy, Cheatum, & Howe CPA's Beginning Balance 1/1/15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Totals Assets Cash $ 35,500 Marketable securities $ 5,000 Accounts receivable $ 12,500 Allow. Doubtful accounts $ - Note Receivable Building & Equip $ 125,000 Accumulated Depreciation $ (40,000) Land $ 40,000 Total Assets $ 178,000 Liabilities Accounts Payable $ 6,500 Wages payable $ - Taxes payable $ 3,000 Notes payable $ 40,000 Total liabilities $ 49,500 Shareholders equity Common stock $ 50,000 Retained earnings $ 78,500 Sales Revenue Salary Expense Advertising Expense Depreciation Expense Interest Expense Bad Debt expense Utilities Expense Office Supplies Expense Tax Expense Dividends Total Shareholders Equity $ 128,500 Dewy, Cheatum, & Howe CPA's Balance Sheet at 31-Dec-14 31-Dec-15 Dewy, Cheatum, & Howe CPA's Current assets Income Statement for Year Ending Cash $ 35,500 31-Dec-15 Marketable securities $ 5,000 Sales revenue Accounts receivable $ 12,500 Expenses: Allow. for Doubtful accounts Salary Total current assets 53,000 Advertising Building and equipment , cost 125,000 Utilities Accumulated depreciation -40,000 Bad Debt Expense Land 40,000 Office Supplies Note Receivable $ - Tax Expense Total assets $178,000 Interest Expense Depreciation Total expenses Current liabilities Net income Accounts payable $6,500 Wages payable 0 Taxes payable 3,000 Total current liabilities 9,500 Notes payable $40,000 Shareholders’ equity Common stock 50,000 Retained earnings 78,500 Treasury stock Dewy, Cheatum, & Howe CPA's Total liabilities and shareholders’ equity $178,000 Statement of Retained Earnings 31-Dec-15 Dewy, Cheatum, & Howe CPA's Retained Earnings Beg Bal Statement of Cash Flow for Year Ended 31-Dec-15 Net Income/(loss) Cash flow from operating activities Dividends NET INCOME / (LOSS) Retained Earnings End Bal Depreciation Accounts Receivable Accounts payable Taxes payable Net cash provided by operations Cash flow from investing activities (Purchases) sale of building and equipment (Purchase) sale of marketable securities (Purchase) sale of land Net cash provided by investing activities Cash flow from financing activities Issuance (repayment) of long-term debt Payment of dividend Issuance (repurchase) of common stock Net cash provided by financing activities Net cash flow Beginning Cash Balance Ending Cash BalanceExplanation / Answer
Balance sheet as at 31/12/2015 Assets Cash 85,500 Marketable securities 10000 Accounts receivable 7,500 Allow. Doubtful accounts -5000 2,500 Total current assets 98,000 Note Receivable 20000 Building & Equip 115,000 Accumulated Depreciation -26,667 88,333 Total Assets 206,333 Liabilities Accounts Payable 9,500 Loan from bank 30,000 Total current liabilities 39,500 Notes payable 22,000 Total liabilities 61,500 Shareholders equity Common stock 50,000 Retained earnings 94,833 Total Shareholders Equity 144,833 Total Liabilities &Shareholders Equity 206,333 Income Statement for Year Ending 31/12 2015 Sales revenue 140000 Expenses: Salary 75000 Advertising 12000 Utilities 13000 Bad Debt Expense 5000 Office Supplies 3000 Tax Expense 2000 Interest Expense 2000 Depreciation 1667 Total expenses 113667 Net income 26333 Statement of Retained Earnings 31-Dec-15 Retained Earnings Beg Bal 78500 Net Income/(loss) 26333 Dividends 10000 Retained Earnings End Bal 94833 Statement of Cash Flow for Year Ended 31-Dec-15 Cash flow from operating activities NET INCOME / (LOSS) 26333 Depreciation 1667 Accounts Receivable -5000 Accounts payable 3000 Taxes payable -3000 Net cash provided by operations 23000 Cash flow from investing activities (Purchases) sale of building and equipment 20000 (Purchase) sale of marketable securities -5000 (Purchase) sale of land 40000 Net cash provided by investing activities 55000 Cash flow from financing activities Issuance (repayment) of long-term debt -18000 Payment of dividend -10000 Issuance (repurchase) of common stock Net cash provided by financing activities -28000 Net cash flow 50000 Beginning Cash Balance 35500 Ending Cash Balance 85500
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